Author: Serkadis

Chinese search engine giant Baidu is using ARM-based servers from Marvell making it the first company to depend on servers using the cell-phone chip in a production environment. Baidu is using the new ARM servers in its cloud storage application named Baidu Pan.

ARM, which licenses its IP to a variety of chip makers, had stated its intentions to enter the data center market back in 2010, as worries about energy efficiency increased and the needs of webscale computing customers changed. While less powerful than their Intel counterparts, a cluster of lower-power ARM chips is more power efficient on a performance per watt basis and some workloads don’t even need the performance characteristics of a big Intel core.

The combination of these two trends has led to a plethora of vendors from big names like Marvell and AMD to startups such as Calxeda to license ARM’s cores with an eye toward making servers. Holding ARM back so far has been the delay in building out 64-bit capable cores (they are expected later this year) as well as a lack of enterprise software running on the ARM platform.

But given the economics of these so-called wimpy cores and the limits of using ARM cores in the enterprise server market today, the use of ARM-based servers in the storage arena is not surprising. Storage usage scenarios are perfect in many ways because they don’t need a lot of raw performance, nor do they require 64-bit capable cores.

Thus, Baidu using ARM for storage makes sense. It’s also an area where Calxeda expects to see its first production deployments sometime this year, according to a conversation I had with Karl Freund, the VP of marketing of Calxeda last December. As for the Baidu deployment, it’s using the quad-core Armada CPU, Marvell’s storage controller, and a 10Gb Ethernet switch all integrated on a single system on a chip.

Marvell’s release says the chip firm customized the ARM servers specifically for Baidu’s cloud storage requirements, taking the concept of server customization common in webscale deployments to the chip level. Marvell says the platform is designed to increase the amount of storage for conventional 2U chassis up to 96 TB, and to lower the total cost of ownership by 25 percent, compared with previous x86-based server solutions. The end result should cut Baidu’s power in its data center by half according to the release.

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Major Apple (AAPL) shareholder Greenlight Capital, headed by billionaire hedge-fund manager David Einhorn, recently sued the consumer electronics giant in an effort to limit the company’s ability to offer preferred stock. At the heart of its claims, Greenlight is arguing that combining three separate items into one proposition — one of which would change the way Apple’s board issues preferred stock — is a violation of SEC rules against “bundling.” On Tuesday evening, the judge presiding over the case said that he is inclined to agree.

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No wonder Google wants to open retail stores and sell more gadgets. Apple’s reach is enormous, which is as important for the brand as making mullah — and there is a whole lot of that. According to NPD, the fruit-logo company accounted for 19.9 percent of all US retail consumer technology sales last year, up from 17.3 percent in 2011.

Samsung ranked second, accounting for 9.3 percent of sales, up 2 points year over year. HP (8.2 percent), Sony (4.4 percent) and Dell (3 percent) rounded out the top five.

Total retail consumer technology sales fell 2 percent year over year to $143 billion. The top-five brands accounted for 45 percent of sales, up three points from 2011. Apple and Samsung sales together increased by $6.5 billion, while the rest of the market declined by $9.5 billion.

Top retailers: Best Buy, Walmart, Apple, Amazon, and Staples.

Apple got big lifts from smartphones and tablets, huge growth categories — up 25 percent and 42 percent, respectively, year over year. iPad and iPhone accounted for 76 percent of all Apple revenue during calendar fourth quarter. The company is tapped into the two most consumer tech categories.

“Tablets and smartphones have been able to stimulate demand for additional devices, but unfortunately it hasn’t been enough, yet, to sustain positive growth trends”, Stephen Baker, NPD’s vice president of industry analysis, says.

Sales of the other three top categories — desktop PCs, notebooks and flat-panel TVs — fell 11 percent, 9 percent and 7 percent, respectively. The five categories accounted for 53 percent of consumer technology sales in 2012, up from 49 percent a year earlier.

“Most market segments have high penetration rates and the demand for additional devices is slowing, or declining”, Baker says. Tablets contributed to PC sales, which is an ongoing trend.

Photo Credit: Redstarstudio/Shutterstock

The dustup over the New York Times’ negative review of Tesla’s Model S electric car was all anyone could talk about last week. But the business story of how the pioneering auto maker, led by Elon Musk, will become profitable will begin to be revealed on Wednesday afternoon, when Tesla holds its fourth quarter and full year 2012 earnings.

The end of 2012 was a pivotal time for Tesla. It transitioned from small-scale manufacturing of its Model S electric car — which won Motor Trend’s car of the year award — to its goal of volume manufacturing of 400 cars per week. That rate puts the company on schedule to make 20,000 cars per year, and that increase in production was just a few weeks behind schedule last year.

2013 is an even more crucial year for Tesla. The company is supposed to hit profitability at some point this year, based on its revenues from sales of the Model S. Analysts expect the company could reach profitability in June.

Tesla’s earnings on Wednesday could shed more light on how close it is to becoming profitable. In the beginning of December, Musk tweeted that Tesla had narrowly become cash flow positive. I’d assume that meant for the quarter the company had more cash coming in than going out (though Musk didn’t specify the time period). So we can watch to see if the cash flow is identified for Q4 in the call.

We’ll also be watching to see if that production ramp rate was officially hit: 400 cars a week, and 20,000 cars per year. Finally listen for Tesla’s gross margins, which will be an indicator of how fast they’ll become profitable (12.5 percent for Q4, 2012, and a goal of 25 percent for 2013).

While Tesla has a lot of skeptics, it’s miraculously survived the hardest part of building an independent electric car company already. It held a successful IPO, as well as follow-on public financings, and it hit its production targets (mostly) on time. In contrast, the vast majority of electric car startups that have tried similar things have struggled and bowed-out in recent years, including Fisker, Think, Aptera, Bright Automotive, Better Place, and Coda.

If you’re still riled up about the New York Times’ test drive, the New York Times’ Public Editor came out with her final assessment on the situation, finding the review had “Problems With Precision and Judgment, but Not Integrity.” Musk appears to be happy with that call. Tesla’s stock was up 6 percent on Tuesday following the finding, and in anticipation of the earnings on Wednesday.

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Demand Media announced today that its board of directors has authorized a plan for the company to explore separating into two separate public companies – one for its media business and one for its domain business.

CEO Richard Rosenblatt said, “Both businesses have grown to become leaders in their respective markets, and we now want to provide additional operational and strategic flexibility to drive sustainable growth. We believe a separation will position each business to better pursue its specific strategic priorities and vision, as well as improve transparency for investors and enable the capital markets to better assess each company’s value, performance and potential.”

“We intend to appropriately capitalize both companies to pursue their distinct growth opportunities, such as the upcoming launch of new generic Top Level Domains that is a transformative event for our domain services business, as well as further diversifying our content offerings in our media business,” he added.

Demand Media expects a potential transaction to come within the next nine to twelve months. In the meantime, the company will work with outside advisers to develop plans for the the board’s further consideration and approval.

The company also just released its Q4 and Fiscal 2012 financial results.

On the earnings call, Rosenblatt said the company intends to increase its investment in its people, its content production, and its gTLD initiative. On the content side of things, it will evolve its content production arm (Demand Studio), and expects to double its investment in content this year, further develop its algorithm, add additional quality improvements (like those that helped it achieve recovery from the Panda update), and expand production capabilities.

The company will also increase distribution by expanding its partner network, which doubled revenues in 2012. Rosenblatt says he expects its revenues to double again this year.

They’re also planning on launching eHow in two more countries this year (after launching in Germany in Q4).

Rosenblatt says they’ll diversify into new content models, and will expand beyond their core ad-driven model with new paid opportunities including subscription video and elearning content.

On the gTLD front, he noted that Amazon and Google were the biggest players, and that their participation will lead to a bigger market for everyone.

Demand Media ranked as a top 20 US web property throughout last year, and was ranked at number 13 in January, according to comScore. The company reached over 125 million unique visitors worldwide in January, and eHow (which was once famously hit by Google’s Panda update) was ranked number 12 in the U.S. with 62 million unique visitors in January.

“We finished the year on a high note, posting record fourth quarter results and completing our fifth consecutive year of record revenue and Adjusted EBITDA,” said Rosenblatt. “We improved content quality and diversified our distribution channels by successfully revamping our content platform in 2012, and are now prepared to significantly increase our content investments in 2013. In addition, we became a leader in the generic Top Level Domain opportunity, due to substantial investments we made in 2012. We plan to increase this investment ahead of the expected launch later this year.”

“As a result of these two different growth opportunities, we also announced today that our Board of Directors has authorized a plan to explore the separation of our business into two independent publicly-traded companies via a tax-free spin-off,” he added. “If approved, the separation will facilitate better operational and strategic flexibility, enabling each business to focus on its distinct priorities and growth opportunities.”

Here’s the earnings release in its entirety:

SANTA MONICA, Calif.–(BUSINESS WIRE)–Feb. 19, 2013– Demand Media, Inc. (NYSE: DMD), a leading digital media and domain services company, today reported financial results for the fourth quarter and fiscal year ended December 31, 2012.

“We finished the year on a high note, posting record fourth quarter results and completing our fifth consecutive year of record revenue and Adjusted EBITDA,” saidRichard Rosenblatt, Chairman and CEO of Demand Media. “We improved content quality and diversified our distribution channels by successfully revamping our content platform in 2012, and are now prepared to significantly increase our content investments in 2013. In addition, we became a leader in the generic Top Level Domain opportunity, due to substantial investments we made in 2012. We plan to increase this investment ahead of the expected launch later this year.”

Rosenblatt added: “As a result of these two different growth opportunities, we also announced today that our Board of Directors has authorized a plan to explore the separation of our business into two independent publicly-traded companies via a tax-free spin-off. If approved, the separation will facilitate better operational and strategic flexibility, enabling each business to focus on its distinct priorities and growth opportunities.”

Financial Summary
In millions, except per share amounts
			Three months ended													Year ended
			December 31,													December 31,
			2011					2012					Change			2011					2012					Change
Total Revenue			$	84.4				$	103.1				22%			$	324.9				$	380.6				17%
Content & Media Revenue ex-TAC(1)			$	49.9				$	62.3				25%			$	193.0				$	227.0				18%
Registrar Revenue			31.4					34.5					10%			119.4					134.2					12%
Total Revenue ex-TAC(1)			$	81.3				$	96.8				19%			$	312.4				$	361.1				16%
Income (loss) from Operations			$	(4.8	)			$	6.1				NA			$	(13.1	)			$	8.7				NA
Adjusted EBITDA(1)			$	23.7				$	29.4				24%			$	86.0				$	103.4				20%
Net income (loss)			$	(6.4	)			$	4.7				NA			$	(18.5	)			$	6.2				NA
Adjusted net income(1)			$	6.8				$	10.8				60%			$	21.9				$	34.3				57%
EPS – diluted			$	(0.08	)			$	0.05				NA			$	(0.27	)			$	0.07				NA
Adjusted EPS(1)			$	0.08				$	0.12				50%			$	0.25				$	0.39				56%
Cash Flow from Operations			$	27.2				$	26.0				(4)%			$	85.3				$	91.0				7%
Free Cash Flow(1)(2)			$	18.3				$	17.1				(7)%			$	19.5				$	62.3				219%

(1)		These non-GAAP financial measures are described below and reconciled to their comparable GAAP measures in the accompanying tables. Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA.
		Reconciliations for both measures are available on the investor relations section of the Company’s website.
(2)		In 2012, the Company invested $18.2 million in generic Top Level Domain (“gTLD”) applications, which did not impact its recurring Free Cash Flow metric.

Q4 2012 Financial Summary:

• Content & Media revenue ex-TAC grew 25% year-over-year, driven by 24% page view growth on the Company’s owned & operated properties as well as 37% growth in network RPMs ex-TAC, reflecting higher revenue from network content partners.
• Registrar revenue grew 10% year-over-year, driven by an increase in the number of domains on our platform, due primarily to growth from new partners.
• Adjusted EBITDA increased 24% year-over-year, resulting in 110 basis points of margin expansion to 30.3% of Revenue ex-TAC. This improvement was driven by the growth in higher margin Content & Media revenue and operating leverage.

“In 2012 we generated over $60 million of free cash flow, which more than funded our acquisition of Name.com and the repurchase of nearly $9 million of our common stock,” said Demand Media’s CFO Mel Tang. “We plan to continue reinvesting our strong cash flows into long-term growth opportunities, such as our gTLD initiative as well as growing and diversifying our content offerings.”

Business Highlights:

• Demand Media ranked as a top 20 US web property throughout 2012, and ranked #13 in January 2013.⁽¹⁾
• Demand Media reached more than 125 million unique visitors worldwide in January 2013.⁽¹⁾
• eHow.com ranked as the #12 website in the US, with 62.0 million unique users inJanuary 2013.⁽¹⁾
• LIVESTRONG.COM/eHow Health ranked as the #3 Health property in the US inJanuary 2013.⁽¹⁾
• Cracked ranked as the #1 Humor property in the US in January 2013.⁽¹⁾
• On December 31, 2012, Demand Media acquired retail registrar Name.com, expanding its registrar platform as it prepares for the historic release of new gTLDs.
• During the fourth quarter of 2012, Demand Media repurchased approximately 572,000 shares of common stock for $4.9 million under its Board-authorized $50.0 million share repurchase program. To date, the Company has repurchased approximately 4.0 million shares of common stock for $30.8 million.
• On February 19, 2013, the Company announced that its Board of Directors has authorized a plan to explore the separation of its business into two distinct publicly traded companies.

⁽¹⁾ Source: comScore.

Operating Metrics:
			Three months ended														Year ended
			December 31,														December 31,
													%														%
			2011					2012					Change				2011					2012					Change
Content & Media Metrics:
Owned and operated
Page views(1) (in millions)			2,696					3,354					24	%			10,378					13,192					27	%
RPM(2)			$	14.53				$	14.55				—				$	15.14				$	13.53				(11	)%
Network of customer websites
Page views(1)(in millions)			4,935					4,530					(8	)%			17,436					18,989					9	%
RPM(2)			$	2.81				$	4.38				56	%			$	2.77				$	3.58				29	%
RPM ex-TAC(3)			$	2.18				$	2.98				37	%			$	2.06				$	2.55				24	%
Registrar Metrics:
End of Period # of Domains(4) (in millions)			12.7					13.7					8	%			12.7					13.7					8	%
Average Revenue per Domain(5)			$	10.08				$	10.09				—				$	10.08				$	10.19				1	%
____________________

(1)		Page views represent the total number of web pages viewed across (a) our owned and operated websites and/or (b) our network of customer websites, to the extent that the viewed customer web pages host the Company’s monetization, social media and/or content services.
(2)		RPM is defined as Content & Media revenue per one thousand page views.
(3)		RPM ex-TAC is defined as Content & Media Revenue ex-TAC per one thousand page views.
(4)		Domain is defined as an individual domain name paid for by a third-party customer where the domain name is managed through our Registrar service offering.
(5)		Average revenue per domain is calculated by dividing Registrar revenue for a period by the average number of domains registered in that period. Average revenue per domain for partial year periods is annualized.
Beginning July 1, 2011, the number of net new domains has been adjusted to include only new registered domains added to our platform for which the Company has recognized revenue. Excluding the impact of this change, average revenue per domain during the three months and year ended December 31, 2012 would have increased 1% and decreased 4%, respectively, compared to the corresponding prior-year periods.

Q4 2012 Operating Metrics:

• Owned & Operated page views increased 24% year-over-year, driven primarily by strong traffic growth on eHow.com and LIVESTRONG.COM. Owned & Operated RPMs were relatively flat year-over-year.
• Network page views decreased 8% year-over-year to 4.5 billion, due primarily to lower traffic from our social media partners. Network RPM ex-TAC increased 37% year-over-year, reflecting higher revenue from our growing network of content partners, primarily YouTube.
• End of period domains increased 8% year-over-year to 13.7 million, driven primarily by the addition of higher volume customers and continued growth from existing resellers, with average revenue per domain flat year-over-year.

Business Outlook

The following forward-looking information includes certain projections made by management as of the date of this press release. The Company does not intend to revise or update this information, except as required by law, and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected. The factors that may affect results include, without limitation, the factors referenced later in this announcement under the caption “Cautionary Information Regarding Forward-Looking Statements.” These and other factors are discussed in more detail in the Company’s filings with the Securities and Exchange Commission.

Excluding $5 to $10 million of estimated expenses in 2013 associated with the formation of the Company’s gTLD initiative, the Company’s guidance for the first quarter endingMarch 31, 2013 and fiscal year ending December 31, 2013 is as follows:

First Quarter 2013

• Revenue in the range of $100.0 – $102.0 million
• Revenue ex-TAC in the range of $94.0 – $96.0 million
• Adjusted EBITDA in the range of $23.5 – $25.5 million
• Adjusted EPS in the range of $0.07 – $0.08 per share
• Weighted average diluted shares 89.0 – 90.0 million

Full Year 2013

• Revenue in the range of $435.0 – $443.0 million
• Revenue ex-TAC in the range of $410.0 – $418.0 million
• Adjusted EBITDA in the range of $110.0 – $115.0 million
• Adjusted EPS in the range of $0.39 – $0.43 per share
• Weighted average diluted shares 89.0 – 91.0 million

Conference Call and Webcast Information

Demand Media will host a corresponding conference call and live webcast at 5:00 p.m. Eastern time today. To access the conference call, dial 877.565.1268 (for domestic participants) or 937.999.3108 (for international participants). The conference ID is 90583374. To participate on the live call, analysts should dial-in at least 10 minutes prior to the commencement of the call. A live webcast also will be available on the Investor Relations section of the Company’s corporate website at http://ir.demandmedia.com and via replay beginning approximately two hours after the completion of the call.

About Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we use certain non-GAAP financial measures described below. The presentation of this additional financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned “Reconciliation of Non-GAAP Measures to Unaudited Consolidated Statements of Operations” included at the end of this release.

Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. While the dollar value of each measure is the same, a comparison of the historical reconciliation of both measures is provided in our supplemental financial schedules posted on the investor relations section of our corporate website athttp://ir.demandmedia.com. The non-GAAP financial measures presented in this release are the primary measures used by the Company’s management and board of directors to understand and evaluate its financial performance and operating trends, including period to period comparisons, to prepare and approve its annual budget and to develop short and long term operational plans. Additionally, Adjusted EBITDA is the primary measure used by the compensation committee of the Company’s board of directors to establish the funding targets for and fund its annual bonus pool for the Company’s employees and executives. We believe our presented non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) management frequently uses them in its discussions with investors, commercial bankers, securities analysts and other users of its financial statements.

Revenue ex-TAC is defined by the Company as GAAP revenue less traffic acquisition costs (TAC). TAC comprises the portion of Content & Media GAAP revenue shared with the Company’s network customers. Management believes that Revenue ex-TAC is a meaningful measure of operating performance because it is frequently used for internal managerial purposes and helps facilitate a more complete period-to-period understanding of factors and trends affecting the Company’s underlying revenue performance of its Content & Media service offering.

Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) is defined by the Company as net income (loss) before income tax expense, other income (expense), interest expense (income), depreciation, amortization, stock-based compensation, as well as the financial impact of acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, expenditures related to the separation of Demand Media into two distinct publicly traded companies, and any gains or losses on certain asset sales or dispositions. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these expenses to be indicative of the Company’s ongoing operating results or future outlook.

Management believes that these non-GAAP financial measures reflect the Company’s business in a manner that allows for meaningful period to period comparisons and analysis of trends. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period to period comparisons of the Company’s underlying recurring revenue and operating costs, which is focused more closely on the current costs necessary to utilize previously acquired long-lived assets. In addition, management believes that it can be useful to exclude certain non-cash charges because the amount of such expenses is the result of long-term investment decisions in previous periods rather than day-to-day operating decisions. For example, due to the long-lived nature of a majority of its media content, the revenue generated by the Company’s media content assets in a given period bears little relationship to the amount of its investment in media content in that same period. Accordingly, management believes that content acquisition costs represent a discretionary long-term capital investment decision undertaken at a point in time. This investment decision is clearly distinguishable from other ongoing business activities, and its discretionary nature and long-term impact differentiate it from specific period transactions, decisions regarding day-to-day operations, and activities that would have an immediate impact on operating or financial performance if materially changed, deferred or terminated.

Adjusted Earnings Per Share is defined by the Company as Adjusted Net Income divided by the weighted average number of shares outstanding. Adjusted Net Income is defined by the Company as net income (loss) before the effect of stock-based compensation, amortization of intangible assets acquired via business combinations, accelerated amortization of intangible assets removed from service, acquisition and realignment costs, the formation expenses directly related to its gTLD initiative, expenditures related to the separation of Demand Media into two distinct publicly traded companies, and any gains or losses on certain asset sales or dispositions, and is calculated using the application of a normalized effective tax rate. Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these expenses to be indicative of the Company’s ongoing operating results or future outlook.

Management believes that Adjusted Net Income and Adjusted Earnings Per Share provide investors with additional useful information to measure the Company’s underlying financial performance, particularly from period to period, because these measures are exclusive of certain non-cash expenses not directly related to the operation of its ongoing business (such as amortization of intangible assets acquired via business combinations, as well as certain other non-cash expenses such as purchase accounting adjustments and stock-based compensation) and include a normalized effective tax rate based on the Company’s statutory tax rate.

Discretionary Free Cash Flow is defined by the Company as net cash provided by operating activities excluding cash outflows from acquisition and realignment activities, the formation expenses directly related to its gTLD initiative, and expenditures related to the separation of Demand Media into two distinct publicly traded companies, less capital expenditures to acquire property and equipment. Free Cash Flow is defined by the Company as Discretionary Free Cash Flow less investments in intangible assets and is not impacted by gTLD application payments, which were $18.2 million in 2012. Management believes that Discretionary Free Cash Flow and Free Cash Flow provide investors with additional useful information to measure operating liquidity because they reflect the Company’s underlying cash flows from recurring operating activities after investing in capital assets and intangible assets. These measures are used by management, and may also be useful for investors, to assess the Company’s ability to generate cash flow for a variety of strategic opportunities, including reinvestment in the business, pursuing new business opportunities, potential acquisitions, payment of dividends and share repurchases.

The use of these non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense, or cash flows that affect the Company’s operations. An additional limitation of these non-GAAP financial measures is that they do not have standardized meanings, and therefore other companies may use the same or similarly named measures but exclude different items or use different computations. Management compensates for these limitations by reconciling these non-GAAP financial measures to their most comparable GAAP financial measures within its financial press releases. Non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from the non-GAAP financial information used by other companies, including peer companies, and therefore comparability may be limited. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure. The accompanying tables have more details on the GAAP financial measures and the related reconciliations.

About Demand Media

Demand Media, Inc. (NYSE: DMD) is a leading digital media and domain services company that informs and entertains one of the internet’s largest audiences, helps advertisers find innovative ways to engage with their customers and enables publishers, individuals and businesses to expand their online presence. Headquartered in Santa Monica, CA, Demand Media has offices in North America, South America and Europe. For more information about Demand Media, please visit www.demandmedia.com.

Cautionary Information Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements involve risks and uncertainties regarding the Company’s future financial performance, and are based on current expectations, estimates and projections about our industry, financial condition, operating performance and results of operations, including certain assumptions related thereto. Statements containing words such as guidance, may, believe, anticipate, expect, intend, plan, project, projections, business outlook, and estimate or similar expressions constitute forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. Potential risks and uncertainties include, among others: our ability to complete a separation of our business as announced herein and unanticipated developments that may delay or negatively impact such a transaction; the possibility that we may decide not to proceed with the separation of our business as announced herein if we determine that alternative opportunities are more favorable to our stockholders; the possibility that we decide to separate our business in a manner different from that disclosed herein; the impact and possible disruption to our operations from pursuing such a separation transaction announced herein; our ability to retain key personnel; the high costs we will likely incur in connection with such a transaction, which we would not be able to recoup if such a transaction is not consummated; the expectation that the transaction announced herein will be tax-free; revenue and growth expectations for the two independent companies following the separation of our business; the ability of each business to operate as an independent entity upon completion of such a transaction; changes in the methodologies of internet search engines, including ongoing algorithmic changes made by Google as well as possible future changes, and the impact such changes may have on page view growth and driving search related traffic to our owned and operated websites and the websites of our network customers; changes in our content creation and distribution platform, including the possible repurposing of content to alternate distribution channels, reduced investments in intangible assets or the sale or removal of content; our ability to successfully launch, produce and monetize new content formats; the inherent challenges of estimating the overall impact on page views and search driven traffic to our owned and operated websites based on the data available to us as internet search engines continue to make adjustments to their search algorithms; our ability to compete with new or existing competitors; our ability to maintain or increase our advertising revenue; our ability to continue to drive and grow traffic to our owned and operated websites and the websites of our network customers; our ability to effectively monetize our portfolio of content; our dependence on material agreements with a specific business partner for a significant portion of our revenue; future internal rates of return on content investment and our decision to invest in different types of content in the future, including premium video and other formats of text content; our ability to attract and retain freelance creative professionals; changes in our level of investment in media content intangibles; the effects of changes or shifts in internet marketing expenditures, including from text to video content as well as from desktop to mobile content; the effects of shifting consumption of media content from desktop to mobile; the effects of seasonality on traffic to our owned and operated websites and the websites of our network customers; our ability to continue to add partners to our registrar platform on competitive terms; our ability to successfully pursue and implement our gTLD initiative; changes in stock-based compensation; changes in amortization or depreciation expense due to a variety of factors; potential write downs, reserves against or impairment of assets including receivables, goodwill, intangibles (including media content) or other assets; changes in tax laws, our business or other factors that would impact anticipated tax benefits or expenses; our ability to successfully identify, consummate and integrate acquisitions; our ability to retain key customers and key personnel; risks associated with litigation; the impact of governmental regulation; and the effects of discontinuing or discontinued business operations. From time to time, we may consider acquisitions or divestitures that, if consummated, could be material. Any forward-looking statements regarding financial metrics are based upon the assumption that no such acquisition or divestiture is consummated during the relevant periods. If an acquisition or divestiture were consummated, actual results could differ materially from any forward-looking statements. More information about potential risk factors that could affect our operating and financial results are contained in our annual report on Form 10-K for the fiscal year endingDecember 31, 2011 filed with the Securities and Exchange Commission(http://www.sec.gov) on February 24, 2012, and as such risk factors may be updated in our quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, including, without limitation, information under the captions Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Furthermore, as discussed above, the Company does not intend to revise or update the information set forth in this press release, except as required by law, and may not provide this type of information in the future.

Demand Media, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
			Three months ended										Year ended
			December 31,										December 31,
			2011					2012					2011					2012
Revenue			$	84,415				$	103,142				$	324,866				$	380,578
Operating expenses
Service costs (exclusive of amortization of intangible assets shown separately below) (1) (2)			40,198					48,865					155,830					181,018
Sales and marketing (1) (2)			9,325					12,823					37,394					46,501
Product development (1) (2)			9,462					9,719					38,146					40,708
General and administrative (1) (2)			13,803					16,171					59,451					63,025
Amortization of intangible assets			16,393					9,460					47,174					40,676
Total operating expenses			89,181					97,038					337,995					371,928
Income (loss) from operations			(4,766		)			6,104					(13,129		)			8,650
Other income (expense)
Interest income			4					8					56					42
Interest expense			(151		)			(157		)			(861		)			(622		)
Other income (expense), net			(75		)			(34		)			(413		)			(111		)
Total other expense			(222		)			(183		)			(1,218		)			(691		)
Income (loss) before income taxes			(4,988		)			5,921					(14,347		)			7,959
Income tax expense			(1,438		)			(1,172		)			(4,177		)			(1,783		)
Net (loss) income			$	(6,426	)			$	4,749				$	(18,524	)			$	6,176
(1) Stock-based compensation expense included in the line items above:
Service costs			$	711				$	679				$	2,052				$	2,820
Sales and marketing			1,416					1,597					4,857					6,118
Product development			1,364					1,283					5,013					6,452
General and administrative			3,263					3,823					16,934					15,978
Total stock-based compensation expense			$	6,754				$	7,382				$	28,856				$	31,368
(2) Depreciation included in the line items above:
Service costs			$	3,770				$	3,663				$	16,075				$	14,452
Sales and marketing			127					108					423					453
Product development			308					238					1,466					1,025
General and administrative			861					1,025					2,994					3,728
Total depreciation			$	5,066				$	5,034				$	20,958				$	19,658
Income (loss) per common share:
Net income (loss)			$	(6,426	)			$	4,749				$	(18,524	)			$	6,176
Cumulative preferred stock dividends (3)			—					—					(2,477		)			—
Net income (loss) attributable to common stockholders			$	(6,426	)			$	4,749				$	(21,001	)			$	6,176
Net income (loss) per share – basic			(0.08		)			0.06					(0.27		)			0.07
Net income (loss) per share – diluted			(0.08		)			0.05					(0.27		)			0.07
Weighted average number of shares – basic			83,592					86,140					78,646					84,553
Weighted average number of shares – diluted			83,592					88,444					78,646					87,237
____________________

(3)

As a result of the Company’s initial public offering which was completed on January 31, 2011, all shares of the Company’s preferred stock were converted to common stock.

Demand Media, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
			December 31,					December 31,
			2011					2012
Current assets
Cash and cash equivalents			$	86,035				$	102,933
Accounts receivable, net			32,665					45,517
Prepaid expenses and other current assets			8,656					6,041
Deferred registration costs			50,636					57,718
Total current assets			177,992					212,209
Property and equipment, net			32,626					35,467
Intangible assets, net			111,304					91,061
Goodwill			256,060					267,034
Deferred registration costs			9,555					11,320
Other long-term assets			2,566					20,906
Total assets			$	590,103				$	637,997
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable			$	10,046				$	10,471
Accrued expenses and other current liabilities			33,932					40,489
Deferred tax liabilities			18,288					18,892
Deferred revenue			71,109					75,142
Total current liabilities			133,375					144,994
Deferred revenue			14,802					15,965
Other liabilities			1,660					4,847
Total liabilities			149,837					165,806
Stockholders’ equity (deficit)
Common stock and additional paid-in capital			528,042					562,703
Treasury stock			(17,064		)			(25,932		)
Accumulated other comprehensive income			59					15
Accumulated deficit			(70,771		)			(64,595		)
Total stockholders’ equity (deficit)			440,266					472,191
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)			$	590,103				$	637,997

Demand Media, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
			Three months ended										Year ended
			December 31,										December 31,
			2011					2012					2011					2012
Cash flows from operating activities:
Net income (loss)			$	(6,426	)			$	4,749				$	(18,524	)			$	6,176
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			21,459					14,494					68,132					60,334
Stock-based compensation			6,741					7,382					28,730					31,368
Other			1,128					1,134					3,491					1,717
Net change in operating assets and liabilities, net of effect of acquisitions			4,322					(1,722		)			3,520					(8,612		)
Net cash provided by operating activities			27,224					26,037					85,349					90,983
Cash flows from investing activities:
Purchases of property and equipment			(4,222		)			(5,283		)			(18,246		)			(17,708		)
Purchases of intangibles			(5,294		)			(4,647		)			(49,283		)			(13,237		)
Payments for gTLD applications			—					—					—					(18,202		)
Cash paid for acquisitions			(38		)			(16,200		)			(31,010		)			(17,480		)
Other			—					—					—					(855		)
Net cash used in investing activities			(9,554		)			(26,130		)			(98,539		)			(67,482		)
Cash flows from financing activities:
Proceeds from issuance of common stock, net			(145		)			—					78,480					—
Repurchases of common stock			(13,336		)			(4,913		)			(17,064		)			(8,869		)
Proceeds from exercises of stock options and contributions to ESPP			3,242					1,451					7,599					12,467
Net taxes paid on RSUs vesting and options exercised			(364		)			(6,151		)			(725		)			(9,496		)
Other			(168		)			(258		)			(1,354		)			(668		)
Net cash provided by (used in) financing activities			(10,771		)			(9,871		)			66,936					(6,566		)
Effect of foreign currency on cash and cash equivalents			(18		)			(19		)			(49		)			(37		)
Change in cash and cash equivalents			6,881					(9,983		)			53,697					16,898
Cash and cash equivalents, beginning of period			79,154					112,916					32,338					86,035
Cash and cash equivalents, end of period			$	86,035				$	102,933				$	86,035				$	102,933

Demand Media, Inc. and Subsidiaries
Reconciliations of Non-GAAP Measures to Unaudited Consolidated Statements of Operations
(In thousands, except per share amounts)
			Three months ended										Year ended
			December 31,										December 31,
			2011					2012					2011					2012
Revenue ex-TAC:
Content & Media revenue			$	53,032				$	68,633				$	205,450				$	246,399
Less: traffic acquisition costs (TAC)			(3,111		)			(6,332		)			(12,495		)			(19,441		)
Content & Media Revenue ex-TAC			49,921					62,301					192,955					226,958
Registrar revenue			31,383					34,509					119,416					134,179
Total Revenue ex-TAC			$	81,304				$	96,810				$	312,371				$	361,137
Adjusted EBITDA(1):
Net income (loss)			$	(6,426	)			$	4,749				$	(18,524	)			$	6,176
Income tax expense			1,438					1,172					4,177					1,783
Interest and other expense, net			222					183					1,218					691
Depreciation and amortization(2)			21,459					14,494					68,132					60,334
Stock-based compensation			6,754					7,382					28,856					31,368
Acquisition and realignment costs(3)			271					314					2,099					446
gTLD expense(4)			—					1,061					—					2,650
Adjusted EBITDA			$	23,718				$	29,355				$	85,958				$	103,448
Discretionary and Total Free Cash Flow:
Net cash provided by operating activities			$	27,224				$	26,037				$	85,349				$	90,983
Purchases of property and equipment			(4,222		)			(5,283		)			(18,246		)			(17,708		)
Acquisition and realignment cash flows			602					25					1,670					25
gTLD expense cash flows(4)			—					974					—					2,198
Discretionary Free Cash Flow			23,604					21,753					68,773					75,498
Purchases of intangible assets			(5,294		)			(4,647		)			(49,283		)			(13,237		)
Free Cash Flow(4)(5)			$	18,310				$	17,106				$	19,490				$	62,261
Adjusted Net Income:
GAAP net income (loss)			$	(6,426	)			$	4,749				$	(18,524	)			$	6,176
(a) Stock-based compensation			6,754					7,382					28,856					31,368
(b) Amortization of intangible assets – M&A			2,974					2,572					12,773					10,904
(c) Content intangible assets removed from service(2)			5,898					237					5,898					2,055
(d) Acquisition and realignment costs(3)			271					314					2,099					446
(e) gTLD expense(4)			—					1,061					—					2,650
(f) Income tax effect of items (a) – (e) & application of 38% statutory tax rate to pre-tax income			(2,707		)			(5,473		)			(9,229		)			(19,262		)
Adjusted Net Income			$	6,764				$	10,842				$	21,873				$	34,337
Non-GAAP Adjusted Net Income per share – diluted			$	0.08				$	0.12				$	0.25				$	0.39
Shares used to calculate non-GAAP Adjusted Net Income per share – diluted(6)			86,758					88,444					88,541					87,237
___________________

(1)		Effective Q1 2012, the Company began reporting Adjusted EBITDA instead of Adjusted OIBDA. While the dollar value of each measure does not differ, a comparison of the historical reconciliation of both measures is provided in our supplemental financial schedules available on the investor relations section of our corporate website.
(2)		In conjunction with its previously announced plans to improve its content creation and distribution platform, the Company elected to remove certain content assets from service, resulting in accelerated amortization expense of $5.9 million in the fourth quarter of 2011, and $1.8 million and $0.2 million in the first and fourth quarter of 2012, respectively.
(3)		Acquisition and realignment costs include such items, when applicable, as (1) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs, (2) legal, accounting and other professional fees directly attributable to acquisition activity, and (3) employee severance payments attributable to acquisition or corporate realignment activities. Management does not consider these costs to be indicative of the Company’s core operating results.
(4)		Comprises formation expenses directly related to the Company’s gTLD initiative that did not generate associated revenue in 2012.
(5)		In 2012, the Company invested $18.2 million in gTLD applications, which did not impact its recurring Free Cash Flow metric.
(6)		Shares used to calculate non-GAAP Adjusted Net Income per share – diluted include the weighted average common stock for the periods presented and all dilutive common stock equivalents at each period. Amounts have been adjusted in 2011 to reflect the revised capital structure following the Company’s initial public offering which was completed on January 31, 2011, whereby the Company issued 5,175 shares of common stock and converted certain warrants and all of its previously outstanding convertible preferred stock into 62,155 shares of common stock as if those transactions were consummated on January 1, 2011.

Demand Media, Inc. and Subsidiaries
Unaudited GAAP Revenue, by Revenue Source
(In thousands)
			Three months ended										Year ended
			December 31,										December 31,
			2011					2012					2011					2012
Content & Media:
Owned and operated websites			$	39,172				$	48,796				$	157,089				$	178,511
Network of customer websites			13,860					19,837					48,361					67,888
Total Revenue – Content & Media			53,032					68,633					205,450					246,399
Registrar			31,383					34,509					119,416					134,179
Total Revenue			$	84,415				$	103,142				$	324,866				$	380,578
			Three months ended										Year ended
			December 31,										December 31,
			2011					2012					2011					2012
Content & Media:
Owned and operated websites			46		%			47		%			48		%			47		%
Network of customer websites			16		%			19		%			15		%			18		%
Total Revenue – Content & Media			63		%			67		%			63		%			65		%
Registrar			37		%			33		%			37		%			35		%
Total Revenue			100		%			100		%			100		%			100		%

 

Source: Demand Media, Inc.

Butler Business Accelerator has released findings from a new study of mobile search engines and question and answer platforms. The study says ChaCha answered questions better than ten other mobile search engines and Q&A platforms including Google, Bing, Yahoo, Siri, Ask.com, Answers.com, and Quora.

“ChaCha delivered the highest quality responses consistently across the largest group of categories and question types,” said Trent Ritzenthaler, operating director of the Butler Business Accelerator.

Here’s a look at the rankings of the Butler University Q&A Intelligence Index, which measured the likelihood that “a user could expect to receive a correct answer in a timely manner to any random query using natural language.”

Here’s what the study had to say about Google:

Google’s response rate was 100%, but the first non-sponsored result on the search results page (which often times was not fully visible as an organic search result on the presented page on a mobile device) only presented an accurate answer about 50% of the time, according to the Butler University Q&A Intelligence Index. On a mobile phone, when accounting for the clutter of ads and the likelihood of extra clicks to achieve the answer, allowing for the answer to be within the first non-sponsored search result might be considered generous. Again, this study differs from the results found in the Piper Jaffray study, but differences are likely due to variations in methodology. For example Piper Jaffray found that Google scores highest in terms of navigation and information (Elmer-DeWitt, 2012).

…

In terms of handling structured data more effectively, Google is promoting direct answers using its new Knowledge Graph and Google Now technology, “which tap into the collective intelligence of the web and understand the world a bit more like people do,” (Google, 2012). The limits of Google’s algorithmic technologies are evident in the empirical results of this study and users’ actual experiences. Other Q&A platforms in this study are also incorporating similar algorithmic solutions.

Okay, the study was sponsored by ChaCha, but Search Engine Land says CEO Scott Jones told them the company had no involvement in the methodology, “nor did it seek to influence the outcome in any way.” So, take that how you will.

We did talk to Jones recently, and he was without a doubt, incredibly confident in ChaCha’s abilities. The company is on the verge of launching a new and vastly improved mobile experience (at least, according to Jones). More on its upcoming app here. Jones did admit that the current ChaCha desktop web experience is “crappy.”

Either way, ChaCha is really geared towards answering different kinds of questions than most of the other services on this list. Even Google thinks ChaCha has the best answers to some questions, despite hitting it with the Panda update:

I should note that this was totally an organic find. ChaCha did not point it out to us (and frankly, the answer ChaCha provides doesn’t really even answer the question).

You can find the study here.

Super cheap solar panels being churned out of China continue to put pressure on the startups looking to build the next generation of thin-film solar cells. According to two reports (Dana Hull, and Greentech Media) thin-film solar startup Nanosolar has done a round of layoffs, which could be as substantial as 75 percent of its staff.

Oh how times have changed — one of the first stories I did for GigaOM’s cleantech channel was “10 questions for Nanosolar CEO Martin Roschiesen” in the summer of 2007. Back then Roschiesen told me the company was starting pilot production that year and had raised enough money to make it profitable. In 2008, the company was valued at $2 billion.

Fast forward to 2012, and Nanosolar raised $70 million from investors, reportedly at a pre-money valuation of $50 million. Aeris Capital, a fund that manages finances for SAP founder Klaus Tschira, partly funded that round as a way to pick up solar assets on the cheap. Other investors in that round included OnPoint Technologies, Mohr Davidow Ventures, Ohana Holdings, and Family Offices. Nanosolar has taken in at least $450 million since its start in 2002.

Nanosolar makes thin solar panels out of a material called copper-indium-gallium-selenide (CIGS). At one time in Silicon Valley, CIGS was the great white hope — Solyndra, Heliovolt, Miasole, and others raised hundreds of millions of dollars to build the next-generation of solar tech. But the price of silicon-based solar dropped dramatically and made the economics of selling more expensive CIGS panels much more difficult. Some of these companies have gone bankrupt, done major layoffs, retrenched or been sold off in fire sales.

Solar Frontier, part of Japan’s Showa Shell, is one of the only companies to reach scale with its CIGS solar panels. The company completed a 900 MW factory in late 2010 and brought all of its production lines into commercial production mode by the summer of 2011.

Nanosolar could end up being acquired for cheap from international investors. South Korean and Chinese power conglomerates have particuarly shown interest in investing in and buying discounted U.S. clean power assets. Or there’s always the Solyndra route — a very public, abrupt bankruptcy.

Related research and analysis from GigaOM Pro:
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• The opportunities for the Internet and clean power
• A 2011 Green IT Forecast
• Green IT’s Q4 Winners: Wind Power, Solar Power, Smart Energy

Google has released its latest Authors@Google video, which features authors Adam Mansbach and T Cooper.

The former is best known for his “children’s book for adults” titled Go the F**k to Sleep. The popular book was made even more popular when actor Samuel L. Jackson read it. He has also written the books Rage is Back, Shackling Water, Angry Black White Boy, The End of the Jews, and upcoming The Dead Run.

Cooper is the author of Real Man Adventures, Lipshitz Six, or Two Angry Blondes and The Beaufort Diaries.

Here’s their @Google Talks:

More recent @Google talks here.

Alibaba has launched a new search engine called Aliyun, which makes use of the same brand as its mobile operating system. Both are actually operated by an Alibaba subsidiary, AliCloud.

Google and Alibaba had a bit of a beef last year, regarding the OS. Acer was set to unveil a smartphone utilizing the OS, which (according to Google) is based on Android, but Google felt that it was a problem in that it was not compatible with the Android ecosystem. As TheNextWeb recaps:

Rejecting Google’s claims that Aliyun OS is a forked version of Android, Alibaba pledged not to deviate from its mobile strategy. The company did, however, move to put some distance between it and Aliyun OS by spinning off the division.

As Greg Sterling at Search Engine Land notes, Google only has less than 5% of the Chinese search market, but Aliyun’s search results pages more closely resemble Google’s (or at least an older version of Google’s) than they do market leader Baidu’s.

Last month, Alibaba founder and CEO Jack Ma announced that he would shed his CEO title, but remain executive chairman. In December, the company, more known for its ecommerce offerings, announced that it had hit a huge annual sales milestone.

Developers looking for Ubuntu on smartphones will get a second treat on February 21. Today, Canonical revealed a build for tablets. Supported testing devices for both platforms: Galaxy Nexus, Nexus 4, Nexus 7 and Nexus 10. Ubuntu replaces Android, not runs alongside or dual-boots with it.

“Ubuntu tablet” supports multi-touch slates running dual-core ARM A9 processor with 1GB of RAM and 8GB storage. However, Canonical’s ambitions are greater for commercially-shipping products: dual-core A15 processor and 2GB RAM for 7-to-10 inch tablets and quad-core A15 or x86 processor and 4GB of RAM for 10-to-12 inch slates. The specs reveal plans to compete with touch ultrabooks or tablet hybrids like Microsoft Surface Pro. The operating system supports up to 20-inch tablets. However, lower-end tablets will be a priority.

Like Apple, Google or Microsoft, Canonical talks a four-screen strategy. In October 2011, CEO Mark Shuttleworth promised Ubuntu would appear on smartphones, tablets and TVs, in addition to PCs. The company formally announced the smartphone OS in January.

The difference: Canonical claims a unified user experience across devices. None of the aforementioned competitors deliver that today, although Google is closest. “The tablet is the next step in our mission to create one unified experience for all personal computing”, Shuttleworth boasts.

Related: Canonical touts a write-once, run-on-any-device benefit for developers. Again, Google is closest to offering something similar. Information about the Touch Developer Preview for phones and tablets already is available, as well as a preview SDK. To reiterate: Software releases Thursday.

“We have both rich native applications and web applications that run side-by-side as equal citizens on the tablet”, Shuttleworth says.

While the first commercial smartphones and tablets are expected this year, Canonical doesn’t plan to unify all form factors into a single platform until 14.04 LTS releases early next year. Ubuntu will be the same across devices, but not the user interface. For example, on smartphones the UI is primed for one-handed operations and two on tablets. Says Shuttleworth about phones: “All the goodness of Ubuntu perfectly shaped to your hand”.

Like Android, Ubuntu tablet supports multiple users, and like Chrome OS a guest mode. Favorite apps launch from a left-pull toolbar, and a swipe opens the full apps page. “Swipe through the right edge and you reveal phone apps running on your tablet”, or The Sidestage, Shuttleworth says. Split-screen presents phone and tablet apps running side-by-side.

The Sidestage and right-top pull-down menu also let users socially interact or access additional services while maintaining the larger content menu for, say, watching a movie.

Ubuntu tablet supports modular designs. A phone docked to a slate displays content in The Sidestage, while the tablet becomes a PC with mouse and keyboard.

Canonical expects OEMs to ship devices running Ubuntu tablet, although partners announcements, along with chipsets, are forthcoming. Support for Nexus devices is meant for developers, but judging from the reaction I see on social networks, gadget geeks will grab and mod, too.

“I want an Ubuntu tablet now!” Christopher Bowley posts to Google+. “Don’t even need a desktop/laptop anymore. Assuming it’s as powerful as the desktop os, which seems like the case. As long as it has external USB support. My external drive, phone, and Tascam pocket studio (which connects as an external drive) is all I need to connect. Seems doable”.

Brett Daugherty: “Liking the +Ubuntu tablet. Gonna flash my phone to the mobile OS Thursday to give that a shot, wouldn’t mind being able to flash my tablet to that too to get the full experience”.

Will you, too?

Nearly a year ago, Google’s Matt Cutts took to Google+ to discuss phone number spam.

“I wanted to clarify a quick point: when people search for a phone number and land on a page like the one below, it’s not really useful and a bad user experience. Also, we do consider it to be keyword stuffing to put so many phone numbers on a page,” he said. “There are a few websites that provide value-add for some phone numbers, e.g. sites that let people discuss a specific phone number that keeps calling them over and over. But if a site stuffs a large number of numbers on its pages without substantial value-add, that can violate our guidelines, not to mention annoy users.”

This is the image he was referring to:

Today, Google released its latest Webmaster Help video, which features Cutts talking about the subject once again. It’s short and sweet, and basically serves as a reminder that Google will take action on this kind of thing:

Database startup Citus Data on Tuesday joined those trying to enable fast SQL queries on Hadoop data, but it has much larger goals. It thinks it can be the only analytic database that anyone needs, able to query data wherever it’s stored across a company’s environment — in relational databases, Hadoop, MongoDB, Amazon S3 and elsewhere.

Big data has opened companies’ eyes to the importance of analytics and alternative data stores, but combining the two often means learning new languages, using multiple tools and probably sacrificing the performance they’re used to from analytic platforms.

Citus Data’s flagship product, called CitusDB, is actually built atop PostgreSQL and its first iteration was designed for Google Dremel-like scale and speed on relational data. Thanks to a feature called “foreign data wrappers,” though, it’s able to run SQL on numerous data types (e.g., CSV, log and JSON files) that don’t comport with how Postgres formats data natively. So, while CitusDB now officially supports the Hadoop Distributed File System in addition to Postgres, it is by no means limited to them.

Matt Ocko, managing partner at Data Collective and one of Citus Data’s early investors, says the database can technically support any data source with an ODBC driver, and even could query something like log files straight from a data store. In fact, Citus is working on extending its support to MongoDB — a capability that’s in beta right now. Ocko is also particularly impressed with CitusDB’s ability to act like a fabric connecting all these data sources rather than making users query each independently and then manually join the data. He cited a demonstration in which CitusDB carried out a query that required executing a join across Postgres and Hadoop.

The other big thing about CitusDB is that it’s not just flexible but fast, too. Ocko said CitusDB has outperformed Oracle’s vaunted Exadata machine on a TPC-H benchmark test with data stored primarily on hard disk. That Postgres-Hadoop query he referenced completed in just a few seconds while running on the Amazon EC2 cloud.

CitusDB is so fast, Citus Co-founder Umur Cubukcu told me, because of how it’s architected. It moves the computation to where the data is rather than trying to move data across the network, and it has some impressive load-balancing the resource-management abilities baked in. If, for example, it needs data housed on a slow-running node in order to complete a task, the software will look for that data elsewhere rather than just wait for the congested resource to free up.

In the case of Hadoop, MapReduce brings the computation to the data, too, but every job requires a scan over the entire dataset. This is why early SQL-on-Hadoop tools such as Hive are still relatively slow. Citus software engineer Carl Steinbach, who came to the company from Cloudera, said CitusDB is between 3 and 20 times faster than Hive depending on the query type.

It’s actually much faster for short queries that might be typical in an interactive environment, but he acknowledged those aren’t really what Hive was designed to do.

Rather, CitusDB’s real competition is the spate of SQL-on-Hadoop projects, products and startups of which it’s now a part. We’ll have a whole session dedicated to this topic at Structure: Data next month, and there isn’t enough room for everything on the market right now — Aster Data, Platfora, Cloudera (with Impala), Apache Drill, Drawn to Scale and Hadapt, to name several.

These are impressive technologies (at least in theory where they’re still under development), and Citus would be remiss to ignore them. But, aside from the ability to query multiple data sources, the company has something the others don’t, Cubukcu said: It has the Postgres community and all the features they’ve built into that database already. Things like connectors, authentication, full-text search and PostGIS for geospatial data that go beyond just running fast queries.

“When you’re talking about an enterprise-class database,” Steinbach said, “you’re talking about more than a query execution engine.”

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As Microsoft has announced a broad launch of its new Outlook.com webmail product, Google has taken the opportunity to discuss how prevalent fraudulent spam that appears to be coming from people you know has become, and the efforts it is taking to keep Gmail (and really Google Accounts) safe.

According to Google, only one percent of spam emails even make it into an inbox, but in 2010, they started seeing a large increase in fraudulent email sent from Google accounts, prompting the team to take more aggressive measures. Google security engineer Mike Hearn writes:

Every time you sign in to Google, whether via your web browser once a month or an email program that checks for new mail every five minutes, our system performs a complex risk analysis to determine how likely it is that the sign-in really comes from you. In fact, there are more than 120 variables that can factor into how a decision is made.

If a sign-in is deemed suspicious or risky for some reason—maybe it’s coming from a country oceans away from your last sign-in—we ask some simple questions about your account. For example, we may ask for the phone number associated with your account, or for the answer to your security question. These questions are normally hard for a hijacker to solve, but are easy for the real owner. Using security measures like these, we’ve dramatically reduced the number of compromised accounts by 99.7 percent since the peak of these hijacking attempts in 2011.

As it often does, Google advises users to take advantage of its 2-step verification system, and to use strong passwords and update account recovery options.

Smart Security 6 extends protection beyond the digital boundaries by integrating the Anti-Theft feature, which is designed to help you retrieve the stolen device running ESET’s suite.

The suite is available for $59.99/43.99€. Getting it on the system is not a difficult process, but it may take a while if you choose to deploy the live installer… (read more)

Google shares reached an all-time high today, surpassing $800 for the first time in the company’s history.

It was only in September, when we reported that Google hit a record high at $748.90, and obviously, they’ve come a long way since even then. According to the Wall Street Journal, shares are up over 13% this year.

Yahoo Finance says the market has grown “increasingly optimistic that Google’s core business and mobile applications have many good years ahead of them.” Reports over the last few days have also indicated that Google will open up retail stores before the end of the year, which will enable it to get its products into even more consumers’ hands.

As of the time of this writing, Google shares are at 803.29 (+10.40‎, 1.31%‎). It’s been five years since Google shares first reached the $700 milestone. Last June, they hit a 12-month low of $559.05.

Shares of rival Apple are down to $457.34 (-2.82‎, -0.61%‎) as of the time of this writing, about a 35% decrease from a high mark in September.

Electric car startup Fisker Automotive is reportedly weighing investment and acquisition offers from Chinese auto tech companies. Bloomberg reports that there’s a $350 million offer for 85 percent of the company from Chinese state-owned car maker Dongfeng Motor Corp, and Reuters reports that China’s Zhejiang Geely Holding Group (which owns Volvo) has another offer for a majority stake with a deal between $200 million and $300 million.

If Fisker is able to close on either of these deals, it could move its business to China and gain the funds to start manufacturing its second car the Atlantic, as well as start paying back its loan to the Department of Energy. Fisker has been looking for suitors — partners and acquirers — for months, as it wrapped up a year with an incredible amount of problems.

But $350 million for 85 percent stake is a major discount on the original valuation of Fisker. The company has raised a billion dollars in funding, and at one point back in 2011 had raised money at a reported valuation of $2.2 billion. But in 2012, the company struggled heavily and I had heard that it was looking to raise money last year at a significantly lower valuation. Clearly, when discussions are for majority stake deals for between $200 million and $300 million, there’s been massive discounting.

Fisker isn’t the only energy tech company that’s looking to sell for a discount to Chinese conglomerates. Lithium ion battery maker — which sold batteries for Fisker’s electric car — went bankrupt and its assets are being sold off to Chinese auto tech giant Wanxiang for $256.6 million. A123 Systems held the largest IPO in 2009, raising some $371 million, and went public at $20 per share. A123 also raised more than $350 million from private investors when it was still a startup.

Wanxiang has also invested in struggling electric car company Smith Electric Vehicles. Battery maker Boston Power also turned to Chinese investors to take its electric car battery business to the next level, as did Protean Electric. Electric car company Coda Automotive — which is also struggling — has a joint venture with China battery maker Lishen and a deal with auto maker Great Wall Motors Company.

Chinese companies and the Chinese government are very interested in amassing next-gen technology for electric cars. China is projected to be the largest electric car maker and market in the world, and is already the world’s largest auto market.

It’s not just electric car assets that Chinese companies want. Wanxiang invested $420 million into GreatPoint Energy, a company based in Cambridge, Mass. that converts coal into cleaner-burning natural gas. And Chinese power company Hanergy acquired the assets of Miasole for $30 million (Miasole had raised hundreds of millions of dollars from private investors).

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The combination of man and machine has been so entrenched in our popular culture that for many, the idea that you could attach a sensor to a mouse brain which enables it to see infrared spectrum may not shocking. Nor would wiring someone’s tongue to determine magnetic north elicit much surprise.

One might wonder why someone wants to find magnetic north using their tongue, but the fact that Gershon Dublon of the Massachusetts Institute of Technology is making this happen using a device called Tongueduino isn’t a big deal. As for the why, apparently the human tongue is both highly sensitive and highly trainable. From an article in the New Scientist (hat tip Steven Crowley):

Dublon says the brain quickly adapts to new stimuli on the tongue and integrates them into our senses. For example, if Tongueduino is attached to a sensor that detects Earth’s magnetic field, users can learn to use their tongue as a compass. “You might not have to train much,” he says. “You could just put this on and start to perceive.”

These sorts of experiments might represent the cutting edge of Ray Kurzweil’s Singularity where humanity and machines meld– but the jury is out on whether the machines will ever develop intelligence as Kurzweil also predicts. Unlike the creation of an artificial brain or true artificial intelligence where machines can somehow gain consciousness, these researchers are talking computers and sensors and wiring them into our existing wetware to give humans new abilities. So we may not get Skynet, but the Terminator is within reach.

If Miguel Nicolelis of Duke University and his team can wire a mouse brain today with infrared vision (you could see in the dark!), how long until we can wire up a human with similar abilities? Of course, we’d have to not only develop the communication protocol for the sensor to brain interface (ie, teach the brain how to interpret the digital signals) but also develop ways to install hardware into the human body.

Right now, getting electronics into people is fraught with risks, not only of infection and rejection, but also for the electronics which can degrade, wander the body or short out. Plus, we might have to revamp our airport security procedures when the masses contain microchips.

Still, the ideas put forth by these researchers are enticing — not because they predict a future that’s in the realm of science fiction — but because both seem eminently plausible. After all, some people are already controlling their prosthetic arms or legs with their minds, so how far is the leap from replacing a missing limb to adding some extra senses? And if we can add these capabilities without having to wear a highly-visible pair of Google Glasses then, how nice would that be?

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Google has released the video for Executive Chairman Eric Schmidt’s recent speech from the company’s Solve For X event.

“A lot of life is about luck, and our goal is to make more luck for ourselves, so that the little gem of an idea that could change the world becomes an idea that could really change the world,” he says.

He goes on to talk about the meme that there’s not going to be any significant mankind progress in the future, and how he disagrees.

Here’s Google co-founder Sergey Brin’s speech.